Fedweek

Arlington, VA - Washington commuters travel to work on the first day back after a government shutdown, early Monday morning on I-395. The shutdown started in December over funding for President Donald Trump's promised U.S.-Mexico border wall. Trump on Friday agreed to end the shutdown for three weeks.

While federal employees who went unpaid due to the partial government shutdown are to receive back pay “as soon as possible” now that appropriations have been restored in affected agencies, as a practical matter it likely will be late this week until that happens.

A measure signed into law a week before the shutdown ended requires agencies to make prompt payments “regardless of the pay cycle” and an OMB memo similarly has told them to “prioritize restoring pay and benefits for employees” among their other early activities post-shutdown.

As it turned out, the shutdown ended in the middle of a biweekly pay period. That requires a special payroll run, short-cutting a process that normally takes about a week after an employee has filed a time and attendance report at the end of a pay period.

Exact guidance is scant so far, but several agencies have told their employees to expect to receive their back pay on Thursday, or possibly as early as Wednesday. Those messages further have said that there will be two separate payments, one covering the pay period that ended January 5 and the second for the period that ended January 19—the two pay periods for which affected employees missed pay distributions. The payments are to reflect regular deductions for taxes and insurance.

By having separate payments, there apparently won’t be unintended tax consequences of a single payment that could otherwise trigger a higher percentage of federal tax withholding by making it appear to the payroll computer that the employee is now more highly paid and thus in a higher tax bracket.

Those distributions further apparently will reflect standard biweekly payouts for the affected employees and thus would not take into account special considerations such as premium pay entitlements for days during the shutdown period. Those would have to be accounted for in later distributions—possibly as early as the next regular distribution about a week after the current pay period ends February 2, but in many cases likely not that soon.

OPM has said in guidance to agencies that “In order to issue retroactive payments as quickly as possible, payroll providers may make some simplifying assumptions. Thus, the initial retroactive pay may not fully reflect application of all the guidance in this document regarding the treatment of hours for pay, leave, and other purposes. For example, the initial retroactive pay may not include pay for irregular overtime work performed by excepted employees during the lapse in appropriations. Payroll providers will work with agencies to make any necessary adjustments as soon as practicable.

“Agencies should follow the guidance of their respective payroll providers for the recording of time and attendance. For example, employees may be coded as if in work status during furlough periods to ensure that all employees are paid at their standard rate of pay,” it says.